BENGHAZI, Libya (Reuters) - Libya’s internationally-recognized parliament decided on Monday to reject a United Nations proposal for a unity government, lawmakers said, in a blow to efforts to end a political crisis.

But the House of Representatives (HoR) said it would continue to take part in U.N.-backed peace talks with its rivals, based in the capital, Tripoli.

Libya is in the grip of a war between the internationally-recognized government and its elected parliament on the one side and an unofficial self-styled government controlling Tripoli. Each side is backed by rival alliances of armed factions.

Four years after the fall of Muammar Gaddafi, Western powers are pushing for both sides to accept the U.N. accord, fearing violence has allowed Islamist militants to gain ground and illegal migrant smugglers to take advantage of the chaos.

The recognized government has operated out of the east of the country since last year when an armed faction called Libya Dawn took over Tripoli, set up its own government and reinstated a former parliament known as the GNC.

The U.N. proposal came after months of protracted negotiations between delegates from both sides, who have faced pressure from hardliners and from continued fighting on the ground that has halted part of Libya’s oil production.

“The majority of the HoR members rejected the U.N.-proposed unity government in today’s meeting and called for the peace dialogue to be continued,” the parliament member and its general rapporteur Saleh Ghalma said.

The parliament spokesman Faraj Hashem confirmed the rejection but said the House of Representatives had not voted on it. “The president of the House, Aghila Saleh, read a statement and left, this is an arbitrary decision,” he told Reuters.

The Tripoli-based parliament has not decided on the U.N. proposal.

The United Nations proposed a national unity government to the warring factions this month.

Fayez Seraj, a lawmaker from the House of Representatives, would be prime minister with three deputy prime ministers from the west, east - representing the Tripoli and Benghazi administrations - and south of the country.

One senior figure each from the western and eastern sides would sit on a six-seat presidential council.

Ghalma said the House of Representatives had rejected all amendments added by the U.N. special envoy to Libya Bernardino Leon to a draft agreement initialed in July. “We demand to have one prime minister with only two deputies,” Ghalma said.

The parliament decision comes two weeks after Western powers endorsed the unity government proposed by the U.N. and called on Libya’s factions to accept it.